OSM Threatens Takeover of Kentucky Surface Mining Regulation

By Molly Moore

Office of Surface Mining Director Joe Pizarchik made headlines in May when he sent a letter to Kentucky regulators warning that their failure to require appropriate reclamation bonds could lead to a federal takeover of all or part of Kentucky’s surface mining enforcement program.

Surface mining law allows states to enforce the law under federal oversight. When it comes to reclamation bonds, that means that states must require coal companies to post a bond equivalent to the cost of reclaiming mine sites. If the company reclaims a site according to permit requirements, they get their money back. If not, the bond provides the state with funds to come in and clean up the site — if the bond amount was sufficient.

Pizarchik’s letter follows several years of heightened federal oversight of Kentucky bonding practices. Kentucky agencies and OSM studied whether the state’s bond amounts are high enough to cover the cost of reclamation if a coal company forfeits.

The resulting reports revealed chronically low bond requirements. A 2008 oversight study found that, among sites where bonds were forfeited, four out of five bond amounts were inadequate.

Reports identified similar problems in 2009 and 2010. A 2011 study found that 18 of 22 forfeited bonds were too low to cover the cost of reclamation.

A separate state study looked at 39 forfeited bonds between January 2007 and May 2011 and found that 80 percent were inadequate.

In April and August of 2011, the Kentucky Department of Natural Resources proposed improvements to the bond system. OSM said both Kentucky proposals were a step forward, but didn’t go far enough to fix the problem. Kentucky bond calculations haven’t been adjusted since 1993.

With the letter, Pizarchik has set in motion a legal process known as Part 733, which allows the state to meet informally with OSM to discuss their differences. If talks fail to generate an agreement, OSM will hold a public hearing in Kentucky. If the problem is still unresolved, OSM can take over all or part of the state’s surface mining enforcement program.